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Governor calls special session on 3 issues

JUNEAU, Alaska (AP) — Gov. Sean Parnell is calling lawmakers back for a special session this week to deal with unresolved issues from the just-ended legislative session, including oil taxes.

Parnell issued a special session call shortly after the House and Senate adjourned their regular session early Monday. Also on the call are HB9, a bill meant to further advance an in-state natural gas pipeline project, and HB359, Parnell's bill to strengthen penalties for people convicted of sex trafficking.

The special session is scheduled to start Wednesday.

Parnell had threatened a special session if several issues weren't addressed before the regular session ended. Those included oil taxes and HB9. The call does not specify a bill number for the item listed as "oil and gas production taxes."

Early Sunday, a House committee gutted the Senate's proposal to boost new-field oil production, instead fusing parts of the bill to another intended to extend Alaska's film tax credit program — a move that sparked a back-and-forth with senators that ran late into the day.

On Saturday — after two months studying the issue this session and a failure by the bipartisan majority to reach agreement on an overhaul of Alaska's oil tax structure — the Senate passed a bill that would give a tax break to new-field oil production. The new-oil provision was similar to one from the stalled overhaul, SB192, and was grafted onto HB276, which was intended to encourage oil and gas drilling in basins around the state.

Some senators hailed the new version of HB276 as a way to bring more independent companies into Alaska.

On Sunday, House Rules, in a packed committee room, glued HB276 as passed by the Senate onto a bill intended to extend Alaska's film tax credit program, then pulled out the tax break for new-field oil production on the North Slope added by the Senate. The original HB276 was by Rep. Steve Thompson, R-Fairbanks, a member of the House majority. The film tax credit bill, SB23, is a priority for Sen. Johnny Ellis, D-Anchorage.

The committee also added onto SB23 a gas-storage bill to help communities with energy needs, another Thompson bill — one that, on its own, had broad-based support. The bill later passed the full House.

The Senate had the option of agreeing to the House changes or going to a conference committee but senators decided to expand their options, adding the film tax provisions and incentives for drilling outside the North Slope to HB252, a bill from Rep. Mia Costello, R-Anchorage, exempting certain small businesses from corporate income tax.

The House responded, hours later and near the end of the night, by rescinding its vote on SB23, then adding Costello's bill to it before sending it back to the Senate. Costello withdrew HB252. Thompson withdrew HB276.

Sen. Bert Stedman, R-Sitka, had objected to the Senate passing a bill with the gas-storage provision, saying the issue wasn't ready for an appropriation yet. He was the lone no vote in the Senate on the SB23 rewrite.

The Legislature ran long, past the scheduled end Sunday, adjourning early Monday morning, after a late-flurry of bills coming out of the Senate side.

House Speaker Mike Chenault on Sunday morning told reporters the Senate version of HB276 was too big a policy call for a conference committee, and said he'd rather see a more comprehensive approach to oil taxes.

Besides that, Chenault's bill to further advance an in-state natural gas pipeline project had stalled in the Senate.

Stedman called the House's decision to set-aside the Senate's oil tax proposal "ridiculous."

Early in the day, Senate President Gary Stevens said it would be up to the House to decide whether to accept the Senate's plan, and up to Parnell to decide whether to call a special session. He said the bill passed by the Senate is significant, and goes a long ways toward efforts to get new oil into the trans-Alaska pipeline.

On Saturday, a vice president of Armstrong Oil and Gas Inc. — one of the independent companies targeted by the Senate plan — sent Stevens and Chenault a letter praising the bill that advanced from the Senate.

"HB276 is a big step in the right direction for meaningful change in the tax code," Ed Kerr wrote in the letter, copied to all legislators. He added later: "The modifications provided for in HB276 as they relate to the development of new fields will be a catalyst to draw new companies to the state to help develop its resources."

Kerr also expressed hope that tax changes could be made to help make production in Alaska's legacy fields more competitive. The lack of that piece — a stumbling block within the Senate majority — was cited by the executive director of the Alaska Oil and Gas Association and a spokeswoman for Parnell as problematic.

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